IYDGMENT No. CATCHWORDS PRACTICE - shadowy claim - varying bases of claim put forward - federal basis of claim originally made groundless - struck out. PRACTICE - security for costs - applicant company insolvent - undertaking by liquidator to pay costs required. Trade Practices Act 1974, s.52 Newark Pty. Ltd. (Receivers Appointed) (In Liquidation) v. Civil & Civic Pty. Ltd. & Anor. Qld G86 of 1987 PINCUS J. BRISBANE 9 MARCH 1988 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G86 of 1987 GENERAL DIVISION ) BETWEEN: NEWARK PTY. LTD. (RECEIVERS APPOINTED) (IN LIQUIDATION) Applicant AND: CIVIL & CIVIC PTY. LTD. First Respondent AND: JOSEPH MICHARL THORPY Second Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 9 MARCH 1988 WHERE MADE: BRISBANE THE COURT ORDERS THAT: l. 2. NOTE: the principal application be struck out; and the applicant pay the respondents' costs of and incidental to the proceedings, to be taxed. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G86 of 1987 GENERAL DIVISION ) BETWEEN: NEWARK PTY. LTD. (RECEIVERS APPOINTED) (IN LIQUIDATION) Applicant AND: CIVIL & CIVIC PTY. LTD. First Respondent AND: JOSEPH MICHAEL THORPY Second Respondent PINCUS J. 9 MARCH 1988 REASONS FOR JUDGMENT There are before me applications for security for costs by each of the two respondents, anda motion for judgment by the first respondent, the latter being supported by the second respondent. The applications I have mentioned were filed in that order, but 1t is convenient to consider the latter first Mr H. Fraser, for the first respondent, argued that the applicant has no case on its present pleading which claims relief under s.52 of the Trade Practices Act 1974. He said, in effect, that the Court has before 1t two reports, and only two, by experts selected by the applicant and each makes it plain that the applicant's case is misconceived. The first of the reports to which I refer was obtained from a Court-appointed expert. The second was obtained by the applicant, apparently as a counter to the first respondent's attempt to have the claim struck out. The first step in analysis of the problem is, of course, to define what the applicant's case is. That is no easy task. The applicant is a tiling contractor, which did work on a large building recently erected in Brisbane. Putting the matter very broadly, its case is based on an assertion that sheets of tiles supplied to it to do the work were slightly larger than those promised it. The statement of claim is a fairly elaborate document, but I will try to epitomise it. The applicant pleads that it was invited to tender to supply and f1x ceramic wall and floor tiles and cement render in respect of a certain building, and that it was falsely told that the second respondent would supply sheets of tiles of a certain size. A sample was produced to the applicant's agent, so the pleading says, of 48 mm x 48 mm tiles affixed to a sheet measuring in total 300 mm x 300 mm. Further, the pleading says that the tiles to be supplied were described in the relevant contract as "Nominal 50 mm x 50 mm 300 mm square sheets", The pleading says that the applicant complained that the tiles actually supplied measured 304 mm x 304 mm, so presumably one is intended to infer that that is the applicant's case - that is, a complaint of the difference between 300 x 300 and 304 x 304 mm sheets. It is not, of course, immediately obvious to one unversed 1n the matter, why the extra 4 mm should have made any difference and the pleading gives no hint about that. It was at one stage asserted on behalf of the applicant that the 300 mm x 300 mm sheets would have fitted without cutting in the spaces to be tiled, but that (rather improbable, on the face of it) assertion has been abandoned. The case now appears to relate to the extent and nature of the cutting required; it still puts forward the idea that the applicant expected sheets of "nominal" 300 mm x 300 mm size to be exactly that size - surely an absurdity. I should mention that something was sought to be made, on behalf of the applicant, of the fact that no particulars of loss were sought by the respondents, beyond those supplied. In my opinion, that circumstance neither excuses the absence from the pleading of any allegation as to what difference the extra 4 mm is said to have made, nor bears upon the present resolution of that question. The Court-appointed expert said in his report that the term "nominal" in the expression "nominal 50 mm x 50 mm on 300 mn Square sheets" means that the tile sheets are approximately the sizes stated. If you looked at the tiles laid, he said, they would measure about 304 mm over six tiles - i.e. over one sheet. That expert thought they could be described as "nominal 50 mm x 50 mm in 300 mm square sheets", and that the extra 4 mm would not be likely to add to the cost of laying. It should be added that before the Court-appointed expert gave his report, solicitors for the applicant wrote to him saying: "Our client's case is for the delays occasioned by the dissatisfaction of Civil & Civic Pty. Ltd. with the set out of the tiling work undertaken by our client." (Civil & Civic Pty. Ltd. 1s the first respondent.) If that is the applicant's case, it 1s difficult to understand the form of the statement of claim which, in 18 pages, together with long particulars of loss, makes no such suggestion. In the second report, to which I have referred above, 1t 1s said in effect that ""nominal" means "modular". That ais obviously incorrect, but in my opinion, the point is of no consequence. The second expert said he had a sample of part of a sheet "stated as being submitted to a meeting on 5 December 1984". That 1s the date on which, according to the pleading, the sample relied on by the applicant was produced. He thought a whole sheet of the tiles as per sample would be 303.6 mm - not 300 mm as the pleading appears to say. The report goes on to explain that if the tiles had been supplied in accordance with the sample "cutting of tiles was inevitable". The expert says that if the draftsperson had drawn the building up differently, there would have been no need for cuts, but nothing in the pleading attacks the drafting of the plans. Again, he says that the first respondent should not have directed (as it apparently did) certain tiles to be pulled up and relaid. There is no complaint about that in the pleading, either. There is also elaborate analysis, in the report, of how certain tile samples fitted into certain spaces, but the expert does not say that over the work as a whole, tiles of exactly 300 mm x 300 mm would have been better, or worse, than those actually supplied. In the course of discussing the matter, however, counsel for the applicant told me that it was to be asserted that a chain of causation could be relied on by the applicant along these lines: if the sheets supplied had been smaller, then the farst respondent would not have given the wrongful direction mentioned above and therefore (indirectly) the wrongful direction can be sued for as a consequence of supply of the wrong size of sheets of tiles. It appears to me that the case based on the sample is gone. There is no suggestion that any evidence might be available to counter the clear evidence from the applicant's expert that the sample supplied was of a sheet exceeding 300 mm x 300 mn. The case has to be that the word "nominal" really means "exact" and that if the contract had been complied with and sheets of precisely 300 mm x 300 mm been supplied, a better result for the applicant would have ensued. It seems plain that the applicant has no evidence to show that. It would indeed be difficult to prove, as a matter of common sense. The applicant's case in this Court seems to me to have no substance. It may be that it has a good claim against the first respondent for giving a wrong direction under the contract, but it has not made that claim, nor has it made the delay claim which it told the Court-appointed expert was its case. Mr Morris, for the applicant, argued, in effect, that there must be a very strong case to warrant striking a claim out on such a basis as 1s set up; I agree. Some remarks made by Sheppard J. relevant to this subject are inthe recent, but unreported, decision of Tytel Pty Limited Vv. Australian Telecommunications Commission (12 February 1988). In considering the question whether joinder of a particular party should be allowed, his Honour remarked: "Tt is no light matter to prevent a party from pursuing a case at the threshold of the proceedings. On the other hand, if the case is clear, as I believe this one 1s, the Court' should not hesitate to bring litigation to an end. As it is, this case will take months of preparation and many weeks of hearing. An order for costs will not provide the successful party with a complete indemnity. Solicitor and client costs usually substantially exceed party and party costs. bee the cost of litigation is so great, the burden of it on parties' time is so substantial and the lists of Courts such as this are so congested that, if the case is an appropriate case, the Court should not shrink from making the appropriate order." This case is not as weighty as that of which Sheppard J. spoke. Nevertheless, in my view, the respondents should not be pestered with this strange litigation any more. In its inception, it was founded (as a matter of jurisdiction) on the idea that the sample sheet of tiles was 300 mm x 300 mm. The suit's reason for being now is the theory that if the sheets of tiles had been slightly smaller, there would have been less likelihood of the first respondents (in breach of contract) making an improper direction. It should be added that there appears to be no suggestion that the work covered by the direction was not paid for. In my opinion, the proceedings should be struck out because: 1. The Trade Practices Act foundation of the case has no substance. 2. The claim which the applicant now appears to wish to bring is for damages for breach of contract for giving a wrong direction - a claim not made in the present pleading, and one having nothing to do with federal law. 3. It is said that if the tile sheets had been slightly smaller, there would have been less likelihood of that breach of contract; that case has never been pleaded and seems to me fanciful. No application for amendment is made. The conclusion at which I have arrived makes ut unnecessary to consider the applications for security. However, un the circumstances it is desirable to say what I would have done with them. The case is one in which the respondents' right to security could not be disputed; the applicant 1s insolvent and in liquidation. There 1s no need to have resort to the shadowy nature of the claim, as analysed above, in exercising discretion. There has been some debate before me as_ to the appropriate sum and it has been suggested that a cash security should be put up. Had I not been of the view that the application should simply be struck out, I would have ordered that the proceedings be forever stayed unless there were filed within 21 days an undertaking under seal by the liquidator Desmond Wiliiam Knight, mentioned in par.l(c) of the statement of claim, to pay any costs ordered to be paid to the respondents but not recovered from the applicant company. The order will be that the principal application be struck out and that the applicant pay the respondents' costs of and incidental to the proceedings, to be taxed. i certify that this and the 77 preceding pages are a true copy of the reasons for judgment herein of His Honour Mr Justice Pincus ff fs 2 . sociate Dated GF Maren 1988